How Exempt Are Attorneys TeFrxom theas Real Estate

How Exempt

Are Attorneys

From the

Texas Real Estate License Act?

By Timothy H. Daniel*

T

he practical and ethical limitations and implications of attorney exemption from the Texas Real Estate License Act ("TRELA"), as they apply to attorneys involved in real estate transactions, are factors of which all lawyers need to be aware. This article will discuss and analyze these issues. Part I will provide background information regarding TRELA followed by the relevant interpretations of the attorney exemption from TRELA in Part II. The practical considerations involved when attorneys obtain a real estate salesperson or brokerage license will be covered in Part III, followed by an assessment of important ethical considerations for attorneys and attorney-brokers in Part IV. For purposes of this article, the

reader should assume that any discussion regarding "attorneys" involves only those attorneys duly li-

censed to practice law in the State of Texas. In connection with this assumption, any discussions regarding "brokers" or "salesper-

sons" shall mean duly licensed brokers and duly licensed salespersons under TRELA.

I. TRELA ? BACKGROUND INFORMATION

Since its enactment in 1939, TRELA has undergone several substantive and non-substantive changes and interpretations.1 As with most state statutes regulating the licensure of real estate salespersons and brokers, TRELA was enacted with the purpose of eliminating or reducing fraud against the public by "unlicensed, unscrupulous, or unqualified persons" involved in real estate transactions.2 TRELA is administered and enforced by the Texas Real Estate Commission ("TREC").3

In its current form, TRELA defines the term "broker" as follows: (1) "Broker":

(A) means a person who, in exchange for a commission or other valuable consideration or with the expectation of receiving a commission or other valuable consideration, performs for another person one of the following acts:

(i) sells, exchanges, purchases, or leases real estate; (ii) offers to sell, exchange, purchase, or lease real estate; (iii) negotiates or attempts to negotiate the listing, sale, exchange, purchase, or lease of real estate; (iv) lists or offers, attempts, or agrees to list real estate for sale, lease, or exchange; (v) appraises or offers, attempts, or agrees to appraise real estate; (vi) auctions or offers, attempts, or agrees to auction real estate; (vii) deals in options on real estate, including buying, selling, or offering to buy or sell options on real estate; (viii) aids or offers or attempts to aid in locating or obtaining real estate for purchase or lease; (ix) procures or assists in procuring a prospect to effect the sale, exchange, or lease of real estate; or (x) procures or assists in procuring property to effect the sale, exchange, or lease of real estate; and

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Journal of Texas Consumer Law

(B) includes a person who: (i) is employed by or for an owner of real estate

to sell any portion of the real estate; or (ii) engages in the business of charging an ad-

vance fee or contracting to collect a fee under a contract that requires the person primarily to promote the sale of real estate by: (a) listing the real estate in a publication primarily used for listing real estate; or (b) referring information about the real estate to brokers.4

Unless otherwise specified in TRELA, a person who performs any of the above activities must be a licensed broker. To be eligible for a brokerage license an individual must have two or more years of active experience as a licensed salesperson in Texas coupled with at least sixty semester hours of post-secondary education in core real estate courses approved by TREC.5 To become a licensed salesperson, an individual must be eighteen years of age, a United States citizen, a resident of the State of Texas, and must establish his honesty, trustworthiness, and integrity to the satisfaction of TREC.6 In addition, an applicant for a salesperson license must meet the education requirements of TRELA,7 demonstrate competency by passing the real estate licensing examination,8 and be sponsored by a licensed broker who has notified TREC of the potential sponsorship.9 After obtaining a salesperson or brokerage license, licensees are required to renew their license according to TREC guidelines, which, in most cases, occurs biannually.10 In order to renew a license with TREC, licensees must meet requirements similar to those required of attorneys, including the payment of dues or renewal fees,11 participating in annual mandatory continuing education,12 and making relevant disclosures regarding moral fitness and character.13 Only upon meeting these requirements may an individual engage in the activities of a broker as defined by TRELA.

TRELA does, however, provide exemptions from the requirements of the Act. These exemptions make TRELA inapplicable to the following:

(1) attorneys licensed in any state; (2) attorneys-in-fact authorized under a power of attor-

ney to conduct a real estate transaction; (3) a public official while engaged in official duties, (4) an auctioneer licensed under Chapter 1802 while

conducting the sale of real estate by auction if the auctioneer does not perform another act of a broker or salesperson; (5) a person acting under a court order or the authority of a will or written trust instrument; (6) a person employed by an owner in the sale of structures and land on which structures are located if the structures are erected by the owner in the course of the owner's business; (7) an on-site manager of an apartment complex; (8) an owner or the owner's employee who leases the owner's improved or unimproved real estate; (9) a partnership or limited liability partnership acting as a broker or salesperson through a partner who is a licensed broker; or (10)a transaction involving: (a) the sale, lease, or transfer of a mineral or mining interest in real property, (b) the sale, lease, or transfer of a cemetery lot, or (c) the lease or management of a hotel or motel.14

Journal of Texas Consumer Law

These exemptions are not absolute, and much has been left to Texas courts in determining their breadth.

II. THE ATTORNEY EXEMPTION UNDER TRELA

For attorneys, especially those specializing in real estate law, it is common to perform activities that fall within the definition of brokerage as an integral part of their practice.15 Not exempting attorneys from TRELA would require many attorneys to obtain a salesperson or brokerage license in addition to their license to practice law.16 Necessarily, most states exempt attorneys from their real estate licensure statutes.17 Although TRELA does not contain any language limiting the attorney exemption, Texas courts, as well as the courts of other jurisdictions, have offered their own interpretations of the extent to which attorneys are exempt from real estate licensure statutes.

A. INTERPRETATIONS OF EXEMPTIONS IN STATES OTHER THAN TEXAS

In Krebs v. Jackson,18 the Pennsylvania Supreme Court interpreted the attorney exemption from the state's real estate licensure statute by noting, in dicta, that attorneys have the right, as an incident of their legal profession, to engage in the leasing of real estate, and they could enter into a proper agreement concerning their fees for such services.19 The attorney in Kribbs, however, engaged in otherwise illegal and fraudulent behavior during the transaction, which voided the agreement and persuaded the court to deny the attorney his right to the agreed fee.20

The New Jersey Superior Court took issue with an attorney who claimed he was wholly exempt from the state's licensure statute in Spirito v. New Jersey Real Estate Comm'n.21 The attorney wrote a letter to the commission requesting the issuance of a broker's license, claiming a right to the license by virtue of his license to practice law.22 The commission notified the attorney that his request would be denied until he complied with the state's apprenticeship and testing requirements.23 The court interpreted the legislative purpose behind the attorney exemption as authorizing attorneys to sell or lease real estate incidental to the normal practice of their profession.24 The court further held that an attorney is not entitled to a real estate broker's license solely by virtue of his license to practice law.25

Subsequently, the New Jersey Supreme Court offered a similar interpretation.26 The court analyzed a situation involving an attorney who was also a licensed salesperson, but not a licensed broker.27 The attorney-salesperson represented a prospective purchaser of residential real estate, and he sought fifty percent of the listing broker's commission to be applied to the purchase price.28 In holding that it was not per se unlawful for an attorney to engage in the business of a real estate broker, the court noted that such practices by an attorney who is not also a licensed broker must only be incidental to his practice of law.29 The court held, however, that an attorney who undertakes brokerage activities pursuant to the attorney exemption, with such activities being incidental to his practice of law, may not be compensated as a broker (i.e. receive a commission).30

The courts of California have also held that attorneys are exempt from the state's licensure requirements so long as they are acting within the scope of their duties as attorneys.31 Activities such as examining real property and commencing negotiations regarding the purchase or sale of real property were

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held to be activities within the scope of an attorney's duties and did not require a broker's license.32 California courts, however, have held that compensation for such services must be sought from a principal to the transaction and cannot be sought from a broker involved in the transaction.33 The courts reasoned that such services are performed for the attorney's client, not the broker.34

Finally, the First Circuit Court of Appeals has considered arguments involving Massachusetts and New Hampshire real estate licensure statutes that did not exempt attorneys.35 In Shinberg v. Burk, an attorney claimed he was acting as a "finder" in a real estate transaction, not as a "broker," and, therefore, did not fall within the scope of the licensure statutes.36 The court looked to Black's Law Dictionary to define "finder," "broker," and "finder's fee," concluding that a "finder" is a "special type of broker that deals in personal property."37 Since the transaction at issue dealt with real property, the court held that the attorney was subject to the two states' licensing requirements, and therefore not entitled to the disputed fee.38

B. INTERPRETATIONS OF THE ATTORNEY EXEMPTION IN TEXAS

In Burchfield v. Markham,39 an attorney advised a real estate broker that he had a client interested in purchasing a piece of property. In order to escape the provisions of TRELA, the broker agreed to split the commission with the attorney provided the attorney nominated another broker to receive his half of the commission.40 Ultimately, the broker refused to pay the promised commission.41 At the time of Markham, the 1951 version of TRELA controlled.42 In 1951, TRELA made it unlawful for brokers to split their fees with anyone other than a salesperson or broker.43 Because brokers were forbidden from entering into agreements with non-brokers, the Texas Supreme Court held that the agreement between the broker and the attorney was unlawful and unenforceable.44

Twenty years later, the Dallas Court of Appeals also refused to exempt attorneys, when it interpreted the attorney exemption to TRELA in the case of Sherman v. Bruton.45 The court examined the history of TRELA to determine the legislature's intent regarding the exemption for attorneys.46 The original exemption excluded "licensed and registered attorneys" from the definition of "real estate dealer."47 A 1955 amendment to TRELA excluded this broad exemption, thus evidencing a legislative intent to limit the exemption to services rendered by the attorney "in the course of an attorney-client relationship."48 The court rejected the argument that an attorney, solely by virtue of his license to practice law, is authorized to engage generally in the business of a real-estate broker.49

In 1986, the court in Elin v. Neal50 took a different and more liberal approach to the attorney exemption. In Elin, an attorney sought to obtain a commission from a broker based on an oral agreement.51 The broker refused to pay the attorney, contending that the attorney did not meet TRELA's statute of frauds requirement regarding the payment of a commission.52 The broker further asserted that attorneys are only exempt from the licensing provisions of TRELA, not the entire act.53 In applying the "plain meaning" rule to TRELA, the court found an absolute exemption for attorneys under TRELA and held that attorneys are exempt from TRELA for all purposes.54 However, the court declined to overrule any previous cases interpreting the attorney exemption.

Controversy over the attorney exemption is spurred when an attorney, who is not a salesperson or broker, engages

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in a real estate transaction on behalf of a client, and thereafter attempts to recover a commission for his services or to enforce an agreement entered into with a salesperson or broker to split a commission. As evidenced by the Texas decisions, a salesperson or broker will typically argue that they cannot split a commission with an attorney who is not also a salesperson or broker without violating TRELA, even though they have entered into such an agreement. The attorney, however, will typically argue that he is wholly exempt from TRELA. The Texas legislature addressed such situations when it re-evaluated TRELA in 1991. In its review, the legislature retained the provisions of TRELA that forebode salespersons and brokers from sharing their fees for performing a brokerage function with anyone other than a salesperson or broker.55 Furthermore, TREC remained authorized under this amendment to suspend or revoke an issued license or take other disciplinary action if the salesperson or broker shares such a fee in violation of TRELA.56

C. PRACTICAL IMPLICATIONS OF THE TRELA EXEMPTION

The interpretations of attorney exemptions from real estate licensure statutes offered by Texas courts and courts in other jurisdictions, coupled with the current TRELA provisions, provide a framework to discuss the attorney exemption. Although attorneys are exempt from the majority of TRELA provisions, certain practical implications of performing brokerage services do exist. For example, one direct limitation on the attorney exemption is found in the Rules of TREC.57 Under these rules, an attorney is not allowed to sponsor salespersons or serve as the designated officer or manager of a licensed corporation or limited liability company unless the attorney is also licensed as a real estate broker.58 The primary concern for an attorney, however, as evidenced by the noted judicial decisions, involves the sharing of fees with a broker. Additionally, attorneys must remember that they are bound by the Ethical Considerations and Disciplinary Rules of the Texas Code of Professional Responsibility.59 A discussion regarding these ethical concerns will follow in Part IV.

In the typical residential real estate transaction,60 a seller approaches a salesperson or broker (the "listing agent") who then agrees to list the property for sale for a standard commission of six percent. If the subsequent purchaser is represented by a salesperson or broker (the "buyer's agent"), the listing agent will typically agree to split the six percent commission with the buyer's agent. If the subsequent purchaser is represented by an attorney who is not also a licensed salesperson or broker, the listing agent is precluded from splitting his commission with the attorney. Instead, the attorney must seek direct compensation for his services from either the seller or the purchaser. In seeking compensation for his services, an attorney could request the listing agent to reduce his fee agreement with the seller. This would allow the attorney's fee to be paid by the seller or would allow the seller to reduce the purchase price in an amount equal to the proposed reduction. However, an agreement to reduce the listing agent's commission would be a matter of a private agreement between the seller and the listing agent.61 It should be noted that attorneys must not insist that a broker lower his fees in this situation, since such insistence could be construed as interference with the contract between the seller and the listing agent.62 Furthermore, while the listing agent is not required to forego his right to compensation under a listing agreement, doing so might be appropriate when balancing his right to a fee against the

Journal of Texas Consumer Law

best interest of his client.63 It should also be noted that for any acter required of applicants. For the attorney who has com-

agreement in which an attorney, salesperson, or broker is to be plied with these requirements to the satisfaction of TREC, the

paid a commission to be enforceable, such agreement must be remaining tasks for salesperson licensure include passing the

in writing.64 Although at least two Texas courts have offered licensing examination and finding a sponsoring broker. As-

what appear to be conflicting opinions regarding this require- suming that the attorney-salesperson adheres to the minimum

ment for attorneys,65 an attorney should strongly consider put- requirements for licensure renewal, he will typically become

ting a commission agreement in writing in order to forego any eligible for his brokerage license after two years of experience

potential litigation on the issue. Additional considerations as a salesperson.

have arisen in the context of the listing agent sharing his fee

with a purchaser who is either unrepresented or who is repre- IV. ETHICAL CONSIDERATIONS FOR THE ATTOR-

sented by an attorney. Such an agreement could allow a pur-

NEY AND THE ATTORNEY-BROKER

chaser who is represented by an attorney to pay his own attor-

ney's fees without the attorney having to request the listing

Although becoming an attorney-broker is a relatively

agent to reduce his commission with the seller.

simple procedure, there are important ethical, statutory, and

The law governing the sharing of fees with a princi- regulatory concerns attorney-brokers should consider.78 These

pal to a real estate transaction is much more relaxed. In Mc- concerns require a substantial awareness of potential conflicts

Call v. Johns,66 a broker entered into an oral agreement with an of interest, confidentiality, and the collection of unconsciona-

attorney-purchaser promising to share his commission in the ble or unreasonable fees. One should also note that the ethi-

form of a reduction in the purchase price.67 Later, the broker cal considerations discussed in this section are equally appli-

refused to pay, arguing that TRELA prohibited him from do- cable to all attorneys, regardless of their additional status as

ing so.68 The attorney contended that, as an attorney, he was salesperson or broker.

exempt under the terms of TRELA, and thus entitled to his

share of the commission.69 The court disagreed with the attor-

A. CONFLICTS OF INTEREST

ney's reasoning, even though an attorney who rendered bro-

kerage services was exempt and needed no license under the

The most common type of conflict of interest in the

provisions of TRELA.70 The court, however, ruled in favor of real estate context arises when the attorney-broker represents

the attorney. The court reasoned that in this case, the attor- more than one party to a transaction. Generally speaking, a

ney was acting for himself and not providing real estate servic- lawyer may represent multiple parties in a particular matter if:

es.71 The court held that the agreement between the attorney- "(1) the lawyer believes that such representation will not ad-

purchaser and the broker was valid and enforceable, not be- versely affect [his] ability to exercise independent professional

cause the attorney was exempt from

TRELA, but because a broker is al-

lowed to advance the interests of the Attorneys could avoid many of the controversies

principal in a real estate transac-

tion.72 It follows that a broker or posed by the TRELA exemption by becoming

salesperson may share his fee with the principal to a transaction,

licensed brokers. No state forbids lawyers from

whether that principal is an attorney, teacher, or an accountant. For

practicing both as attorneys and brokers.

the principal who is a seller in this

situation, a salesperson or broker could certainly avoid the prohibitions contained in TRELA.73 judgment as to the interests of each client; and (2) if all cli-

However, for the principal who is a buyer in this situation, the ents consent to the representation [preferably in writing] after

salesperson or broker should consider sharing the fee only with full disclosure of the potential conflicts."79

full disclosure to all parties involved in the transaction.74 Such

This typical conflict of interest was examined in Dil-

fee sharing could affect the lender's loan-to-value ratio or pos- lard v. Broyles,80 where an attorney represented both the seller

sibly violate the lender's underwriting guidelines.75 By making and buyer in a residential real estate transaction and was named

full disclosure, the broker can ensure that he has obtained the as trustee in the deed of trust. After defaulting on the note,

lender's permission for sharing his fee with a principal to the the attorney commenced foreclosure proceedings and sold the

transaction. Additionally, a principal receiving such a fee property pursuant to his authority under the deed of trust.81

should be provided with a 1099 form reporting the income to The purchaser sought to set aside the foreclosure sale alleging

the Internal Revenue Service.76

fraud on the part of the attorney.82 The Court of Appeals held

that the attorney had not acted improperly or unethically be-

III. BECOMING AN ATTORNEY-BROKER

cause he had disclosed the conflict and obtained the parties'

consent to proceed.83 Although the attorney in Dillard was

As a practical matter, attorneys could avoid many of exonerated by the court, disciplinary actions in cases of this

the controversies posed by the TRELA exemption by becom- sort can range from reprimands to indefinite suspensions of

ing licensed brokers. Even though licensing statutes vary from attorneys who fail to adequately disclose potential conflicts of

state to state, no state forbids lawyers from practicing both as interest.84 Such problems can be avoided in most scenarios if

attorneys and brokers.77

the attorney either declines representation or provides his cli-

For attorneys, becoming a licensed broker should not ents with full disclosure and obtains the clients' informed con-

prove too difficult. Many law school courses will meet the sent. With respect to such waivers, however, the New Jersey

minimum educational requirements of TREC, and by becom- Superior Court has held that the representation of a purchas-

ing licensed to practice law in the State of Texas, attorneys er and a seller in connection with a real estate transaction "is

have already demonstrated the requisite moral fitness and char- so fraught with obvious situations where a conflict may arise

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141

that [the] attorney shall not undertake to represent both parties...."85 The court further held that "consent to continued representation is immaterial."86

B. CONFIDENTIALITY CONSERNS

Akin to the potential for a conflict of interest are issues relating to the confidentiality of client information or secrets. This situation is likely to arise when an attorney-broker is representing either the purchaser or seller in a real estate transaction. An attorney's fiduciary duty will usually extend only to his client (i.e., the purchaser or the seller), though TRELA requires brokers to disclose some information to both parties.87 The attorney-broker could become caught between two conflicting positions. If the attorney-broker maintains confidentiality, he could place his brokerage license in jeopardy or harm his client. However, if the attorney-broker does not maintain confidentiality, he could place his license to practice law in jeopardy if he harms his client. An attorney-broker could avoid this situation by advising his client of the potential conflict before undertaking representation.88 An attorney could also ask the client to waive, preferably in writing, the duty of confidentiality concerning information the attorneybroker might be required to disclose to the other parties to the transaction.89

An additional problem tends to arise when the other party to such transactions is not represented by an attorney. In this situation, it is preferable not to give advice to the unrepresented party other than to obtain counsel.90

C. UNCONSCIONABLE OR UNREASONABLE FEES

A third matter with which the attorney-broker should be concerned is the method in which the attorney-broker is to be compensated for his services. If the attorney-broker is to be paid a commission, there is a possibility of having his fee adjudged unconscionable or unreasonable in violation of the Texas Disciplinary Rules of Professional Conduct.91 Under Rule 1.04(a), "[a] fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable."92 Although no Texas court has ruled that an attorney receiving a commission as his fee is unreasonable or unconscionable per se, Rule 1.04(b) sets forth the factors that may be considered in determining the reasonableness of a fee as follows:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the

circumstances; (6) the nature and length of the professional relationship

with the client; (7) the experience, reputation, and ability of the lawyer

or lawyers performing the services; and (8) whether the fee is fixed or contingent on the results

obtained or uncertainty of collection before the legal services have been rendered.93 Rule 1.04(b) also provides that other factors may be considered to determine the reasonableness of a fee.94 The most important factors to be considered by the attorney or the attorney-broker seeking a commission as his

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fee include the sophistication of the parties, the complexity of the transaction, and the difference between the commission and a possible fixed or hourly fee. For the simple residential transaction requiring an attorney only to fill in the blanks of a form contract, a commission would likely be much higher than a fixed or hourly fee. However, for a more complex transaction involving substantial supplemental matters, a commission could conceivably amount to much less than a fixed or hourly fee. Generally speaking, a split commission will be much more than an attorney's fixed or hourly fee, especially in "high dollar" real estate transactions. Therefore, attorneys who represent clients involved in "high dollar" real estate transactions find that being compensated based on a commission to be much more desirous. Such a situation could place the attorney in a position of conflict with his client ? that is, does closing the transaction in order to be paid a commission become more important than giving sound legal advice to his client? Attorneys in such a situation must, therefore, be able to substitute what could easily be classified as selfish motives for and in favor of the best interests of their client. This is not to say that attorneys should avoid the possibility of being paid a commission from a real estate transaction at all costs. Such arrangements could be much more preferable to clients. Regardless, the attorney and the attorney-broker must consider all factors and consequences in order to form a reasonable belief that receiving a commission is reasonable, while noting that such reasonable belief will always be open to potential criticism or interpretation. Arguably, if such an agreement could be held enforceable, an attorney-broker could avoid such circumstances by providing adequate disclosure to his client that he is representing his client solely as a salesperson or broker, and not his attorney.

V. CONCLUSION

Despite changes in the TRELA and somewhat liberal court decisions, it appears that several problems and concerns still exist for real estate attorneys operating under the attorney exemption to TRELA. Nonetheless, most of these problems can be solved and the concerns alleviated provided attorneys take appropriate steps. Many of the pitfalls associated with the attorney exemption to TRELA can be overcome by becoming a licensed salesperson or broker. Remembering to look only to the principals to the transaction for the payment of fees, or negotiating a reduced sales price in exchange for a broker's commission reduction, are two essential steps an attorney can take to avoid the fee sharing controversy. However, attorneybrokers will continue to face certain ethical, statutory, and regulatory considerations. By declining representation or disclosing any potential conflicts of interest and obtaining a client's informed consent, many disciplinary actions can easily be avoided. Likewise, when an attorney-broker feels compelled to breach his client's confidentiality, obtaining a waiver from the client will be necessary. Finally, an attorney or attorneybroker must remain cautious of collecting a commission from the proceeds if such payment could be considered unconscionable or unreasonable. By evaluating the complexity of the transaction and the sophistication of his client, an attorney will be better able to determine what form of fee agreement is appropriate. With caution, communication, and careful assessment, a real estate lawyer can establish a lucrative career by performing brokerage services as either an attorney or as an attorney-broker.

Journal of Texas Consumer Law

* J.D. Candidate, 2004, University of Houston Law Center; Assistant Lead Articles Editor, 2003-2004, JOURNAL OF TEXAS CONSUMER LAW. I would like to extend my appreciation to Professor Charles J. Jacobus for his assistance and suggestions, Professor Robert Schuwerk for his advice and opinions, Realtor Terri Raybourn for her inspiration to research this topic, Houston Daniel for his confidence and support, and my wife, Kenda Bing, for her support, patience, and encouragement, without which this article would never have been possible.

1. TRELA was originally enacted under 1939 Tex. Gen. Laws ch. 1. TRELA was subsequently amended and ultimately re-codified as TEX. REV. CIV. STAT. ANN. art. 6573a (Vernon 1999). TEX. REV. CIV. STAT. ANN. art. 6573a (Vernon 1999) underwent a non-substantive revision and was repealed by Acts 2001, 77th Leg., and replaced with Chapter 1101 of the Texas Occupations Code with an effective date of June 1, 2003. 2. See, e.g., Henry S. Miller v. Treo Enterp., 585 S.W.2d 674 (Tex. 1979) (citing Hall v. Hard, 335 S.W.2d 584, 589 (1960); Gregory v. Roedenbeck, 174 S.W.2d 585, 586-87 (1943); Justice v. Willard, 538 S.W.2d 651, 653 (Tex.Civ.App.?Amarillo 1976). 3. TEX. OCC. CODE ANN. ? 1101.151 (Vernon 2003). 4. Id. ? 1101.002(1). 5. Id. ? 1101.356. 6. Id. ? 1101.354(1)-(2). 7. Id. ? 1101.358. 8. Id. ? 1101.401. 9. Id. ? 1101.363(b). 10. Id. ?? 1101.451-1101.457. 11. Id. ? 1101.152(a)(2), (a)(4). 12. Id. ?? 1101.454, 1101.455(b). 13. Id. ? 1101.452. 14. Id. ? 1101.005. 15. CHARLES J. JACOBUS, TEXAS REAL ESTATE LAW, at 121 (8th ed. 1999). 16. Id. 17. See Jean A. Mortland, Attorneys as Real Estate Brokers: Ethical Considerations, 25 REAL PROP. PROB. & TR. J. 755 (1991) (listing Iowa and New York as states that allow attorneys to engage in full brokerage services without licensure; Massachusetts, Pennsylvania, Rhode Island, and South Dakota as states that grant a broker's license to attorneys without examination; New Jersey and West Virginia as states that require a broker's license to engage in full brokerage services; Florida, Hawaii, Louisiana, Montana, and Wisconsin as states that require a broker's license with no exemption of services rendered by an attorney; and the remainder of the states, including Texas, as states that require a broker's license but make an exception for services rendered by an attorney in performing legal services). 18. Kribbs v. Jackson, 129 A.2d 490 (Pa. 1957). 19. Id. at 495. 20. Id. at 497-98. 21. Spirito v. New Jersey Real Estate Comm'n, 434 A.2d 623 (N.J. Super. 1981). 22. Id. 23. Id. 24. Id. at 628. 25. Id. 26. In re Roth, 577 A.2d 490, 491-492 (N.J. 1990). 27. Id. 28. Id. 29. Id. at 493-94. 30. Id. at 495. 31. CAL. BUS. & PROF. CODE ? 10133 (West 2004). 32. See Provisor v. Haas Realty, Inc., 256 Cal.App.2d 850, 854-55 (1967). 33. Id. 34. See Id.; See also Estate of Prieto, 243 Cal.App.2d 79 (1966). 35. Shinberg v. Bruk, 875 F.2d 973, 975 (1st Cir. 1989). 36. Id. at 974. 37. Id. at 977. 38. Id. at 979. 39. Burchfield v. Markham, 294 S.W.2d 795 ( 1956). 40. Id. at 796. 41. Id. 42. Id. 43. Id. at 797. 44. Id. at 798.

45. Sherman v. Bruton, 497 S.W.2d 316 (Tex.App.?Dallas 1973). 46. Id. at 321-22. 47. Id. at 321 (citing 1939 Tex. Gen. Laws ch. 1 ? 2(a)(1)). 48. Id. at 322. 49. Id. 50. Elin v. Neal, 720 S.W.2d 224 (Tex.App.?Houston [14th Dist.] 1986). 51. Id. 52. Id. at 224-225. 53. Id. 54. Id. at 226. 55. TEX. OCC. CODE ANN. ? 1101.651. 56. Id. ? 1101.652(b)(11). 57. 22 TAC ?? 531.1-535.403. 58. Id. ? 535.31. 59. TEX. DISCIPLINARY R. PROF'L CONDUCT, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G app. A (Vernon Supp. 1997) (TEX. STATE BAR R. art. X, ? 9). 60. The reader should note that the same principles and considerations are present during a commercial real estate transaction, only on a grander level. Therefore, an analysis of the typical commercial real estate transaction would be superfluous. 61. Ron Walker and Dennis R. Schmidt, Can brokers share their fees with an attorney?, TEXAS REALTOR, November 1995, available at http:// trec.state.tx.us/pdf/articles/other/TAR_001.pdf. 62. Id. 63. Id. 64. TEX. OCC. CODE, supra note 3, ? 1101.806. 65. See Sherman v. Bruton, supra n.45; but see Elin v. Neal, supra n.50, at 227. 66. McCall v. Johns, 294 S.W.2d 869 (Tex. Civ. App.?San Antonio 1956). 67. Id. 68. Id. at 869-70. 69. Id. 70. Id. at 871. 71. Id. 72. Id. 73. See Walker and Schmidt, supra n.61. 74. Id. 75. Id. 76. See JACOBUS, supra n.15. 77. See Mortland, supra n.17, at 755. 78. For simplicity, the attorney who is licensed either as a salesperson or a broker will be referred to as an attorney-broker throughout the remainder of this section. 79. Jeb C. Sanford, Ethical, Statutory, and Regulatory Conflicts of Interest in Real Estate Transactions, 17 ST. MARY'S L. J. 79, 83 (1985) (citing MODEL CODE OF PROFESSIONAL RESPONSIBILITY Canons 4, 5, 9 (1980); MODEL RULES OF PROFESSIONAL CONDUCT Rules 1.7, 1.8, 1.9, 1.13 (1983)). 80. Dillard v. Broyles, 633 S.W.2d 636 (Tex.App.?Corpus Christi 1982). 81. Id. 82. Id. 83. Id. at 643. 84. See Sanford, supra n.79, at 86. 85. Baldasarre v. Butler, 604 A.2d 112, 120 (N.J. 1992) (emphasis omitted). 86. Id. (citing to NEW JERSEY RULES OF COURT, APPENDIX TO PART I, RULES OF PROFESSIONAL CONDUCT, Rule 1.7). 87. See generally TEX. OCC. CODE, supra note 3, ?? 1101.556, 1101.558, 1101.559. 88. See Mortland, supra n.17, at 762. 89. Id. 90. MODEL RULES OF PROFESSIONAL CONDUCT RULE 4.3 and commentary. 91. TEX. DISCIPLINARY R. PROF'L CONDUCT 1.04(a) (forbidding attorneys from charging or collecting unconscionable or illegal fees). 92. Id. 93. Id. 1.04(b). 94. Id.

Journal of Texas Consumer Law

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